IRS Publishes New Withholding Tables For Employers

by Leroy Baker, Tax-News.com, New York

30 May 2003

As President Bush put his signature to the $350 billion tax cut bill at a ceremony in the East Room of the White House this week, the Internal Revenue Service published its revised withholding tax tables, which take into account the changes set out in the new law.

The new tax regime is expected to take effect within a few weeks, and in a recent statement the IRS suggested that employers should use these new tables as soon as they can work them into their payroll systems, but not later than July 1, 2003. By the third week of June, employers can expect to find in the mail a printed copy of Publication 15-T containing all the tables, the tax authority announced.

The Revenue explained that the new law will extend the 10% rate to cover the first $7,000 of taxable income for single persons, in addition to $14,000 for married couples. It also lowered the tax rates above 15% to 25, 28, 33 and 35%. This represents a drop of two percentage points for each rate except the top one, which went down 3.6 points.

According to the IRS, the standard deduction for married couples will rise to $9,500, whilst their 15% tax rate will be extended to $56,800 of taxable income. Each figure is double the number for single taxpayers. The changes reduce the “marriage penalty” – the difference between the tax couples pay and the amount they would have paid as two single persons.

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